The crude oil markets finally sold off during the week, showing some signs of conviction. Longer-term traders are finally getting a chance.
WTI Crude Oil
The West Texas Intermediate Crude Oil market has fallen rather significantly during the course of the week, reaching down just below the $40 level, a crucial level that a lot of traders will be paying attention to. Because of this, I think that it is only a matter of time before we get a bit of an extension to the downside, perhaps Amy towards the $35 level, maybe even the $30 level. With Iraq looking to get out of production cuts, and the fact that crude oil inventories still remain extraordinarily full, it is difficult to imagine a scenario where crude oil can take off far too much higher.
Brent markets also fell during the course of the week, reaching down towards the $43 level. That is an area that is supportive, but quite frankly Brent will follow WTI, so it is only a matter of time before it goes looking towards the $40 level if the other market breaks down. This is not to say that we cannot rally a bit, but this is the first somewhat decisive candlestick we have made in a couple of months, so you have to pay attention to that.
Volatility is starting to pick up in other markets, so crude oil course should continue to be the same as long as that is the case. Traders are coming back from holiday, so that could help as well, as this has been a very quiet summer for the commodity. It looks as if the short side will continue to be the best way forward.
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